Hoffman, P., Postel-Vinay, G. and Rosenthal, J.-L. …and notaries never became bankers

December 9, 2010

Hoffman, Philip T., Gilles Postel-Vinay and Jean-Laurent Rosenthal (2001) Notaries, Banking and the Expansion of Credit in Old-Regime Paris, chapter 7 in Priceless Markets. The Political Economy of Credit in Paris, 1660-1870. University of Chicago Press, Chicago and London; p.136-176.

Some of the ideas developed in this chapter have been presented elsewhere, so this summary concentrates on the what’s new.

Evidence indicates that in the second quarter of the 18th century, some Parisian notaries were venturing away from the role of brokers between creditors and debtors they had acquired since the mid 1600s. In effect some of them were filling the position left empty by the absence of deposit banks (p.138). They were accepting interest-bearing deposits redeemable on demand and investing the money in different longer term assets such as bills of exchange, government debt and loans to individuals.

Moral hazards
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Hoffman P., Postel-Vinay G. and Rosenthal J.-L. (1992) Private credit market in Paris

March 28, 2009

Hoffman, Philip T., Postel-Vinay, Gilles, and Rosenthal, Jean-Laurent (1992) “Private Credit Markets in Paris, 1690-1840”, The Journal of Economic History, 52/2, 293-306.

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Introduction

In Ancien Régime France, “credit assumed such importance that, as one historian suggest, an 18th-century person’s very reputation was bound up with his ability to obtain loans.” Until the late 19th century, the usual intermediaries on the credit market were not banks but notaries (p.294). Notarial offices recorded families’ transactions for generations, notaries thus enjoyed a unique ability to access information on the parties’ financial history. Their intimate knowledge of a person’s position allowed them to match borrowers and lenders, often on short notice. Read the rest of this entry »